It isn't a surprise that technology staples Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG)(NASDAQ:GOOGL) have thrust themselves into the market for wearable medical technology -- an emerging industry at the nexus of buzzwords like The Internet of Things, Wearable Technology, and Personalized Medicine. But while consumers begin to pine for smart gadgets, demand isn't the only obstacle wearable tech makers must overcome. There are several building blocks to a wearable technology revolution that will need to be assembled for its reliable, safe, and effective use in healthcare. As the development of new devices like Google's smart contact lens progresses, we're beginning to learn more about these three pillars: technology, clinical development, and data integration.
Google didn't wait long to one-up its own Google Glass with a new smart contact lens. Unlike Glass, however, the contacts don't appear to be meant as a mobile media device but rather as a noninvasive diagnostic tool. Using microchips and incredibly small electronics the contacts are able to measure the sugar content of tears once per second.
According to the American Diabetes Association, nearly 30 million Americans suffer from diabetes, a lack of or insensitivity to insulin that makes it very difficult to regulate blood sugar. To keep blood sugar under control, patients must adopt a daily routine of finger pricks and self-monitoring. The process is inconvenient, intermittent, and often painful, leading to sub-par patient adherence and the potential for complications. The contacts, with their noninvasive and nearly continuous monitoring of tear sugar (thought to be a surrogate measure of blood sugar), represent a solution to a serious unmet medical need in a multibillion dollar market.
Google's technology may be an ambitious example, but the contacts themselves represent the first building block of telehealth: the technology. Like its peers developing smart watches, heart rate monitors, or other remote health devices, advances in wearable tech will require substantial investment and risk taking. The devices will need to be compact enough for practical use, and engineered reliably enough to entrust one's health to. Smart contacts appear to be a step in that direction.
As wearable technology advances from popular devices like FitBit and Nike FuelBand into more clinically useful tools, their use is certain to come under heightened scrutiny from Food and Drug Administration regulators. That is particularly the case for devices like Google's contacts, which serve as diagnostic tools to guide drug treatment. In fact, Apple has already engaged with the FDA over the distinction between educational wearables applications and those intended for diagnostic use. According to an FDA memorandum, there is also a distinction between the software used to analyze diagnostic data and the user-facing software that reports the data.
With an eye on these kinds of hurdles, Google has found a partner to help tackle the second building block of wearable tech innovation: clinical development. Announced in July, Google has teamed up with Novartis to undertake scientifically rigorous clinical studies of its contacts. Under the terms of that deal, Novartis will in-license the right to develop and commercialize the contacts through its Alcon eye-care division. This kind of partnership melding technological innovation with established R&D and regulatory experience is certain to play a role in the advancement of wearable technology.
Reporting the data
It may sound obvious, but putting the mountains of data collected by wearable devices to good use is a major logistical building block of a telehealth/medical wearable revolution. Existing mainstream wearables are excellent for patient engagement, and Google's new Google Fit platform will serve to consolidate those data into a user-friendly mobile interface. But for doctors, the data can be so much more useful when synced with patients' complete records in a private and secure way.
Data connectivity isn't only important for patient care, though. In these times of great concern over healthcare costs, you can bet that insurers will keep a close watch on the pricing of new technologies. Data integration and collection will be essential for manufacturers to collect evidence that their devices provide sustained clinically meaningful benefits to patients and are worth the investment of healthcare payers.
Several tech and health care IT providers have jockeyed for position in the market for HIPAA-compliant data exchange. Apple and electronic medical record (EMR) vendor Epic Systems inked the first major deal on this front, allowing data from wearable devices to flow through Apple's HealthKit and sync directly with a patient's EMR. Spreading its reach further, Apple is now also in talks with EMR vendor Allscripts, as well as other major health centers across the US. Likewise $27 billion consumer electronics maker Phillips linked up with cloud-computing powerhouse Salesforce.com to facilitate the exchange of data from its medical devices. Despite its cloud prowess, Google has a shaky history with EMRs, and so far doesn't have a partner for Google Fit. As it stands, that makes Apple's iOS a far more attractive platform for potential wearable tech developers seeking that kind of EMR connectivity.
What's an investor to do?
Wearable technology certainly presents an interesting investment, but the layers of complexity can make the options seem overwhelming. In emerging industries such as this, the best opportunities often lie with companies possessing the most optionality. In the context of our industry building blocks, the most optionality exists for companies that facilitate one particular step in development, rather than usher products from conception to market. Apple's HealthKit platform, for example, takes a bite out of the growing industry while distributing risk to the multitude of hardware makers developing new technologies.
Wearable technology and personalized medicine are really just budding dreams in the healthcare community, but present significant opportunities to improve patient care while cutting health care costs. Keep your eye on this emerging industry, but beware of the obstacles that face entrants into this exciting space.
Seth Robey owns shares of Apple and Nike. The Motley Fool recommends Apple, Google (A shares), Google (C shares), and Nike. The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), and Nike. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.